Saturday, July 24, 2010

Home Buyers Will Have Extra Time to Close and Qualify for Federal Tax Credit

Home buyers who were worried about closing their home purchases before the federal home buyers’ tax credit cutoff can relax now that Congress and the Obama administration have extended the deadline.

The action came when Congress voted to give home buyers an extra three months to close their purchases and qualify for the federal tax credit. President Obama signed the legislation into law.

The legislation gives home buyers until September 30 to complete their purchases and qualify for tax credits of up to $8,000 for first-time buyers and $6,500 for existing owners who move. Under the original terms of the tax credit legislation, buyers had until April 30 to sign a sale contract and until June 30 to close the sale.

The legislation only allows people who already have signed contracts to close at the later date and still qualify for the tax credit. It was estimated that about 180,000 buyers needed the tax credit extension because of reported holdups in the mortgage approval process.

According to the Treasury Department, nearly 3 million taxpayers claimed the tax credits through May 22 at a cost of more than $21 billion.

The newly purchased home must be used as a primary residence. Other restrictions apply.

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